Railway privatisation in Argentina was a process which began in 1989 under the presidency of Carlos Menem, following a series of neoliberal economic reforms. This primarily consisted of breaking up the state-owned railway company Ferrocarriles Argentinos (FA) and allowing the former lines to be operated by private companies instead of the state.
This policy was met with widespread criticism and proved catastrophic for the Argentine railways whose service worsened significantly in the years that followed, with entire lines closing and infrastructure deteriorating beyond repair. Privatisation was ultimately reversed in 2015 with the creation of Nuevos Ferrocarriles Argentinos.
Background
Since railway nationalisation in 1948, during the presidency of Juan Perón, the network had been operated by the state-owned company Ferrocarriles Argentinos (FA) which comprised the six relatively independent divisions, Sarmiento, Mitre, Urquiza, San Martín, Belgrano and Roca.Crónica del día que Perón anunció la compra de los trenes: el apuro inglés de vender “esos fierros viejos” by Adrián Pignatelli on Infobae, 1 Mar 2024
By the time President Carlos Menem's administration took over in 1989, FA had a serious economic deficit, with no investment projected and a high amount of social charges owed to the state. The amount of freight services had considerably decreased between 1970 and 1990, going from 13,500 million tons to 7,500 million twenty years later, almost a 45% decrease. The infrastructure and rolling stock were seriously deteriorated, with the exception of the central network. The majority of the locomotives and coaches had become obsolete, therefore maintenance costs also increased. The aim was to reduce FA's deficit previous to a major restructuring of the company.La historia de un desgüace on Página/12, 2 Jul 2012
With the railway network's chronic deficit having risen to US$355 million per year, the National Congress adopted Law 23,696 (named ) which began the privatisation process in 1989.
The law allowed president Menem to declare a state of emergency over any state-owned company with the objective to proceed to a privatisation or closure of that company. In November 1989, Menem pronounced his famous threat to any rail workers contemplating strike action: "" ("A line that goes on strike is a line that will be closed").
Freight services
Although FA supported the idea of operating the freight line in competition with private companies, the Ministry of Public Works (assisted by the World Bank) excluded FA from the activity, allowing only private concessionaires to operate the lines. In 1990 a program of restructuring was signed by FA, the Ministry and the World Bank. That agreement was the first official document to suggest the possibility to exclude FA from the operation of public transport.
The government granted concessions for a term of 30 years, extendable to 10 years.Argentina: North meets South Railway Age February 1994 pages 41-46 It was also established that investments made by private operators became property of the state when the contract of concession finished. The concessionaire only kept the rolling stock or other goods acquired during the term of concession.
For freight transport, the government established zones of interest according to traffic. The first section was Rosario–Bahía Blanca with a traffic estimated in 2,000,000 tons per year along its 5,300-km length. The second section was the Urquiza Railway with 1,200,000 tons per year along a length of 2,700 km. The third section was Mitre Railway with 2,500,000 tons (also considering the possibility of passenger services) along a length of 4,800 km. The San Martín Railway was included as the fourth section, with a length of 4,700 km.
The majority of Roca Railway was granted in concession to Ferrosur Roca, property of Loma Negra, the largest cement producer in Argentina. The San Martín was granted to Buenos Aires al Pacífico, while Sarmiento was granted to Ferroexpreso Pampeano (owned by Techint), Urquiza to Ferrocarril Mesopotámico, and Mitre to Nuevo Central Argentino.
Only the Belgrano Railway freight service remained under the control of the state due to lack of interest from private investors. Nevertheless, the railway would be granted to Belgrano Cargas, a consortium established by the railway union Unión Ferroviaria in 1999. That same year, Brazilian company América Latina Logística took over the Urquiza and San Martín lines, replacing Ferrocarril Mesopotámico and BAP respectively.
Freight services were granted in concession as follows:
Concessionaire Railway/s Gauge (mm) Length (km) Period Ferroexpreso Pampeano Sarmiento, Roca 1,676 5,094 1991–2022 Nuevo Central Argentino Mitre 1,676 4,900 1992–2022 Ferrosur Roca Roca 1,676 3,145 1993–2023 Buenos Aires al Pacífico San Martín 1,676 5,690 1993–1999 Mesopotámico General Urquiza Urquiza 1,4352,704 1993–1999 América Latina Logística Urquiza 1,435 2,704 1999–2013 San Martín 1,676 5,690 1999–2013 Belgrano Cargas Belgrano 1,000 9,860 1999–2013
Passenger services Commuter rail (Buenos Aires)
In March 1991 the government separated the urban passenger rail services and metro operating within the city of Buenos Aires from the rest of the rail network, and to this end created the holding company FEMESA. Whilst the freight concessionaires were expected to make a profit, it was recognized that the operation of these services would require public subsidy. Concessions were granted to the bidder who would require the lowest subsidy. Four companies bid successfully for the seven lines originally operated by the six divisions of Ferrocarriles Argentinos, together with the Subte, as shown below:La Privatización de los ferrocarriles en Argentina: el nuevo rol del Estado at the University of Buenos Aires Digital Library
Note: only concessionaires from the original privatisation process started in 1993 are listed. Concessionaire Line/s Gauge (mm) Length (km) Period Metrovías Urquiza 1,43526 1994–present Subte 1,435 44 1994–present Metropolitano San Martín 1,676 55 1994–2007 Roca 1,676 252 1995–2007 Belgrano Sur 1,000 58 1994–2007 Ferrovías Belgrano Norte 1,000 52 1994–present Trenes de Buenos Aires Mitre 1,676 182 1995–2012 Sarmiento 1,676 167 1995–2012 Tren de la Costa Mitre 1,435 15,5 1995–2013
The concessions were mainly for 10 years, with an optional 10-year extension, except for the Metro and the Línea Urquiza which were for an initial term of 20 years. As in the case of the freight concessions, the government maintained ownership of the assets, whilst the concessionaires undertook the operation of their services as described in their original bids. Maximum fares were set by the government but were subject to automatic increases according to service quality and the prevailing rate of inflation. Financial penalties would be levied if agreed levels of service were not achieved.
In spite of these companies receiving large government subsidies, the services operated by Metropolitano deteriorated to a point where the concession for the operation of Línea San Martín was revoked in 2004 and concessions for the operation of the other two lines by the company were revoked in 2007."Hubo numerosos alertas que no se atendieron", La Nación, 17 May 2007 All three lines were subsequently operated by transitional private consortium UGOFE.
Trenes de Buenos Aires operated the Mitre and Sarmiento lines until the concession was revoked after the Once rail disaster on February 22, 2012, at Once Station, Buenos Aires, in which 51 people died and at least 703 people were injured, TBA was placed under federal intervention on February 28; its concessions to operate the Mitre and Sarmiento lines were ultimately revoked on May 24. After the cancellation of the contact, both lines were taken over by transitional consortium Unidad de Gestión Operativa Mitre Sarmiento (UGOMS). Metrovías took over the operation of the Buenos Aires Subte, the Buenos Aires Premetro, and the Urquiza Line in 1994, and established an earlier closing time of 23:00 on all three systems in order to conduct extensive maintenance and reconstruction, which was retained even after the reconstruction was completed. Numerous proposals to extend the operating hours of all three Metrovías-operated services have failed.
When UGOFE and UGOMS were dissolved, Corredores Ferroviarios (a company part of Grupo Roggio, which also owns Metrovías) and Argentren took over the Mitre/San Martín and Belgrano Sur/Roca lines, respectively.Roggio y EMEPA se repartirán el manejo de cuatro ferrocarriles clarin.comTrenes cero kilómetro después de cincuenta años/ Cambios Recientes pagina12.com.ar"Trenes: le dan a Roggio el Mitre y el San Martín y a Emepa, el Roca y el Belgrano Sur", La Nación, 12 Feb 2014"Las privadas volverán a operar la mayoría de las líneas ferroviarias", Clarín, 12 Feb 2014"De a uno por línea, para mejor control", Página 12, 12 Feb 2014"Metrovías operará las líneas Mitre y San Martín", En el Subte, 12 Feb 2014 The company operated both lines until the government rescinded the agreement with the company in March 2015."Ya está lista la ley que prevé más control estatal sobre los trenes", Clarín, 5 Mar 2015"Estado rescindió contrato de trenes a privados y avisó que no pagará indemnizaciones", Ambito Financiero, 2 Mar 2015Buenos Aires commuter routes renationalised Railway Gazette International 3 March 2015Resolution N° 171/2015 Boletín Oficial de la República Argentina
Apart from Corredores Ferroviarios, other private company, Argentren, was granted concession to operate the Roca and Belgrano Sur lines. The contract was also revoked by the government in March 2015.
Other rail services On 20 May 1992 the government announced that all inter-city passenger services, other than Buenos Aires to Mar del Plata, would be discontinued on 1 January 1993, unless provincial authorities either agreed to assume responsibility for them or selected a private concessionaire to operate them on their behalf.
Provincial governments that took over the services to avoid closures were: Buenos Aires, establishing state-owned company Ferrobaires. The company started operating services in 1993 but was closed in 2016 after several accidents and derailment due to obsolete rolling stock and lack of maintenance.Ferrobaires: a 5 años del cierre, ¿qué trenes conectan a la provincia? on Energiaytransporte.com.ar, 7 July 2021 Chaco Province operated trains through state-owned Servicios Ferroviarios del Chaco (1999–2010)Crea "servicios ferroviarios del Chaco S.A." (SEFECHA)" – Ley 4.282 Tucumán also operated a railway service to Buenos Aires to keep the line active. Services started in 1992 but ceased in 1997."Trenes en el recuerdo" on Haciendo Vía, 17 Sep 2009 Río Negro created its own company named Tren Patagónico to operate trains from Viedma to Bariloche"Avanza la reactivación del Tren Patagónico", Minuto Uno, 16 April 2014 that had been under concession since 1993.
On the other hand, La Trochita was never privatised and closed in 1992 due to the lack of interest of private investors. Nevertheless, the line would be later reopened, being currently cooperatively operated by the governments of Río Negro and Chubut provinces.La Trochita, monumento histórico nacional on PATAGONIA ANDINA. 25 May 2023
Long-distance and tourist services granted to private companies are listed below:
Concessionaire Division Gauge (mm) Length (km) Period Tucumán Ferrocarriles Retiro–Tucumán 1,676 1,260 1997–2000 Ferrocentral 2004–2014 Ferrocarriles Mediterráneos Córdoba–Villa María 1,676 150 1992–2004 Ferrocentral Tren de las Sierras 1,000 150 2007–13 Servicios Ferroviarios Patagónico Viedma–Bariloche 1,676 826 1993–? Trenes Especiales Argentinos F. Lacroze–Posadas 1,435 1,060 2003–2011 (unknown) Southern Fueguian 0,500 7 1994–present (unknown) Tren a las Nubes 1,000 217 1991–2005 EcoTren 2005–2014
Bibliography